Microsoft is currently engaged in discussions regarding the extension of its acquisition contract with Activision Blizzard, a leading video game maker. The contract is set to expire on Tuesday and the purpose of the extension is to overcome the remaining regulatory obstacles to their massive $69 billion deal. A reliable source familiar with the matter disclosed this information on Monday.
It’s important to note that the expiration of the contract does not automatically result in the collapse of the deal. It simply grants either company the right to walk away from the transaction if they choose to do so.
However, Microsoft, the manufacturer of the Xbox gaming console, is actively seeking an extension of the contract to ensure that Activision remains exclusive and is not enticed by other potential buyers or experiences a change of heart. This information was provided by the undisclosed source.
Unfortunately, the specific terms of the extension being negotiated and whether it would offer more advantageous terms for Activision are currently unknown.
If an agreement is not reached by the end of Tuesday, the companies plan to continue negotiating the extension. The source, who wishes to remain anonymous due to the confidential nature of the matter, informed us of this development.
Requests for comment from Microsoft and Activision have not yet been answered.
An extension would provide the companies with additional time to address regulatory concerns in the United Kingdom, the only major jurisdiction that poses a challenge to completing the largest ever acquisition in the gaming sector.
Microsoft and Activision are currently in talks with the Competition and Markets Authority (CMA) to propose potential remedies that would alleviate the antitrust concerns raised by the authority.
The CMA has expressed doubts that Microsoft’s promise to provide access to Activision’s highly valuable “Call of Duty” franchise on rival cloud gaming platforms adequately safeguards competition in the market. In order to allow for further negotiations between the companies, the CMA has extended its investigation until August 29.
Last week, Microsoft entered into an agreement to ensure that “Call of Duty” will remain available on Sony Group’s PlayStation console. Sony has been one of the deal’s most vocal critics, asserting that it could limit consumer choice.
On Friday, a US appeals court dismissed the US Federal Trade Commission’s request to halt Microsoft’s acquisition of Activision, the maker of “Call of Duty.” This decision eliminates one of the final obstacles standing in the way of the acquisition’s completion.
Activision’s shares closed at $93.2 on Monday, trading slightly lower than the deal price of $95 per share. This suggests that most investors now view the deal’s completion as highly likely.
© Thomson Reuters 2023
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